Donald Trump signs sweeping tax reform legislation that he touted as a job creation package into law in the Oval Office at the White House on 22 December.
Photograph: Chip Somodevilla/Getty Images

Jobs! Jobs! Jobs! That was Donald Trump’s promise to America when he was elected president last November. So as we approach the end of Trump’s first year in office, how has the job market done?

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On the surface the answer seems to be not badly, if not markedly different from how it was performing at the end of the Obama administration. But some economists and employment experts warn that below the surface structural issues – ones that helped propel Trump into office – remain and unless they are addressed they could cause problems for the president, the US and the rest of the world.

In the run-up to Christmas Maurice Jones, chief executive of Local Initiatives Support Corporation (LISC), a nonprofit that works in struggling communities, was in Houston, one of the US’s most economically vibrant cities.

At 4.7% the city’s unemployment rate is slightly above the nation’s (now 4.1%) but in the areas where LISC works the rate can be 10% to 20% or higher. In other areas of the city there are huge numbers of jobs vacant.

“We need to disaggregate these numbers,” said Jones, who blames skill shortages for much of the disparity. “On any given day there are 10,000 unfilled vacancies in the Houston medical centers. But if you believe the unemployment numbers, there’s no problem with the jobs market at all.”

The Bureau of Labor Statistics too shows unemployment rates still vary widely by race and age. White unemployment is just 3.6%, for African Americans it is 7.3% and teens are unemployed at a rate of 15.9%. At the local level the geographic picture can be even starker. And, as Jones points out, large numbers of people, those who have fallen off the grid, out of the workforce or are undocumented, don’t make the headline unemployment rate.

The US has bounced back from the dark depths of the Great Recession and recovered all of the 8.7m jobs it claimed, adding jobs every month since 2010 and setting a new record for uninterrupted jobs growth.

Trump once railed against the poor state of the jobs market, arguing the figures were false, but in office he seems happier with the big numbers, which have followed smoothly on from the Obama era. In 2018 we will start to see whether he has the appetite, or the policies, to address the underlying problems in the job market that helped elect him.

Employment growth has averaged 174,000 a month so far this year, compared with an average monthly gain of 187,000 in 2016. Perhaps this is because we are nearing full employment – the Federal Reserve seems to think so and is slowly raising interest rates after a long period of holding them near zero.

But Steve Glickman, co-founder and executive director of the Economic Innovation Group (EIG), worries that Trump, like many before him, is looking at the numbers all wrong.

EIG’s research tallies with Jones’s observations and, Glickman argues, debunks “the idea that growth in the US is going to lift all boats”, he said. “The percentage of the country that has been benefiting from this growth has been decreasing every decade.”

EIG’s analysis of job creation shows that in the 1990s almost 60% of US counties matched the national growth rate. In the 2000s it was 44% and in 2010s just 28% of US counties matched the US growth rate.

In the intervening years “super performing” metro areas have sucked up ever more of the businesses, capital and people that create new jobs. In the 1990s about 125 counties accounted for half of new businesses created – new businesses are the biggest generator of new jobs. In the 2010s just 20 counties accounted for half of new business creation. Five metro areas – Dallas, Houston, Los Angeles, Miami and New York – dominate business creation. Between them from 2010 to 2014 the five metro areas produced as big an increase in businesses as the rest of the nation combined.

Similar trends have occurred across the western world with cities such as London, for example, racing ahead at the expense of the rest of the UK.

“This explains the divide between what people in Washington [or London] talk about, 4% unemployment, 3% growth, record stock markets and the fact that so few in the country are benefiting from that growth,” he said. “Something broke down during this recovery.”

Two large swaths of America, the industrialized areas, Baltimore, upstate New York and through the midwest, and smaller towns and rural areas have lost out. Voters in many of those areas, where people have felt left behind, helped propel Trump to victory.

The problem for Trump, whose massive tax package aims to stimulate more business growth, is that while he and others have blamed technology and globalization for jobs losses, in recent history consolidation has played as large if not a larger part in that trend, said Glickman.

Take for example the banking sector, where regional banks have gone out of business, often bought up by larger rivals. The US had 4,938 commercial banks at the end of the third quarter of 2017, according to the Federal Reserve Bank of St Louis. At the start of 1984 there were 14,400.

With them have gone local branches, well-paid jobs and also the “social capital” that comes with a local banking team that is embedded, and lends to, the local business community, said Glickman. Those jobs are being replaced by low-wage jobs from large companies such as Amazon and Walmart.

“This is a downward spiral that we are not going to get out of if we don’t take some kind of affirmative action,” he said.

Trump’s huge tax break for businesses will give already cash-rich big businesses even more money to play with and probably spark more consolidations in 2018 and beyond and a further concentration of geographic influence.

On top of this wages are still a problem. Middle-wage jobs in areas like manufacturing and construction are coming back. There were 12.5m jobs in manufacturing in November this year, up from 12.3m in November 2016. But still more people are working retail, 15.8m, leisure and hospitality, 16m, and healthcare and social assistance, 19m. All of these sectors are dominated by low-wage, low-skill workers.

The makeup of the jobs market has led to a long-term trend of slow wage growth. Over the year, wages have risen just 64¢ or 2.5%, and this sluggishness can be traced back to the 1970s. Wages for workers with a college degree have fared better but only a third of Americans have a bachelor’s degree or higher.

On top of that some 4.8 million people who want full-time jobs are still working part-time.

Elise Gould, senior economist at the Economic Policy Institute, says slow wage growth has been one of the central mysteries of the recovery. It may be explained by the large number of people who have remained out of the workforce.

In April 2000 81.9% of 25- to 54-year-olds (“prime-age adults”, in the jargon of economists) were in the workforce. That fell to 74.8% in December 2009 and has since risen to 79%. There was no meaningful pickup in the pace of improvement in Trump’s first year in office. The rate increased by an average of 0.7% a year between 2013 and 2016. From November 2016 to November 2017, this share rose by 0.8%.

The slow rate of recovery and the remaining “slack” may mean that employers maintain the upper hand in wage negotiations as the pool of workers expands with the slow return of people to an improving job market.

But longer term, says Jones, structural problems will remain for disadvantaged communities if they are not given the skills and training they need to get into today’s jobs market.

“The real work is still to be done,” said Jones. There is “great pride and incredible talent” in the rural and urban communities that have yet to see the benefit of the recovery, he said. “But without the proper training it’s difficult to see how they will benefit.”

His big fear following Trump’s tax cut is that the kinds of programs needed to get people back into the jobs market are exactly the kinds of programs that will be cut as Republicans search for ways to pay for their tax plan.

“By 2025 the US will need to fill 16m jobs in ‘middle skill’ positions,” said Jones. “That’s not going to happen organically.”

So for Trump – elected on a wave of economic populism – 2017’s jobs report is at best a pass.

Now with his tax bill passed he will have to prove that his policies can deliver the kind of broad-based economic recovery America has been missing. Without it he will face an economic backlash of his own.